The China Securities Regulatory Commission (CSRC) believes FTX’s bankruptcy filing had far-reaching ramifications for the broader cryptocurrency ecology and showed the need to enact more stringent regulations to protect retail crypto consumers.
There’s a need to protect retail investors
Responding to media inquiries, the body mandated to regulate and oversee the securities and futures sectors in China intimated that the collapse of FTX highlighted the inherent risks associated with using poorly regulated crypto exchanges. According to the CSRC, the incident was also a reminder to authorities of the need to strengthen existing regulatory frameworks to better protect retail investors in the crypto industry.
FTX contagion fears
After FTX filed for Chapter 11 bankruptcy protection in the U.S., cryptocurrency-exposed stocks fell sharply, undoing the little uptick the market had gained in the days leading up to the debacle.
Shares of MicroStrategy (MSTR), which holds roughly 130,000 bitcoins, slumped 10%, while San Francisco-based crypto exchange Coinbase (COIN) saw a decline of almost 8%. The shares of bitcoin miners like Riot Blockchain (RIOT) and Marathon Digital (MARA) also suffered significant losses, and the cryptocurrency-focused bank Silvergate (SI) saw a 14% decline.
Following the filing, the two biggest cryptocurrencies, bitcoin (BTC) and ether (ETH), both saw falls of roughly 6%, and the whole cryptocurrency market experienced declines of a similar magnitude.
This alarming contagion ripping through the crypto landscape has forced regulators like the CSRC and its Hong Kong affiliate, the Securities and Futures Commission (SFC), to ramp up regulatory efforts both in Hong Kong and mainland China.
SFC developing new rules to work in tandem with new anti-money laundering bill
Following Hong Kong’s Legislative Council’s passage of the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill, the SFC is drawing up regulatory requirements for registered crypto asset exchanges under the new regime. Additionally, the Commission has stated that it will launch a public consultation on the proposed regulations and keep a careful eye on recent developments in the crypto sector, with investor protection as its primary goal.
The SFC reiterated that while many jurisdictions have introduced less stringent regulations for digital asset service providers, Hong Kong has adopted a more comprehensive stance on regulations, guided by the belief that crypto exchanges operate similarly to traditional securities brokers.
The new regulations include requiring crypto exchanges to segregate customer assets and to submit audited accounts and financial information at uniform intervals.
Source: https://crypto.news/chinas-regulator-sees-ftxs-bankruptcy-as-a-reason-for-tighter-regulation/